Rjr Sending Chun King To Orient

June 22, 1989|By Janet Key.

In a bizarre twist in East-West trade relations, a group of Singapore investors has bought a product as American as . . . Chun King foods.

RJR Nabisco Inc. said Wednesday it will sell its Chun King foods division for $52 million to Yeo Hiap Seng Limited and Fullerton Holdings Pte. Ltd., a subsidiary of Temasek Holdings Pte. Ltd. of Singapore.

The sale is part of RJR`s continuing effort to reduce debt from its $24.5 billion buyout by Kohlberg Kravis Roberts & Co. That buyout, completed late last year, was the largest in U.S. history.

Founded in 1946 by Jeno Paulucci, son of Italian immigrants to Minnesota`s Iron Range, Chun King is the second-largest U.S. producer of canned Oriental foods, with 20 percent of the market. La Choy, owned by Chicago-based Beatrice Co., is the market leader, with 40 percent.

After selling Chun King-twice-to what was then R.J. Reynolds Tobacco Co., Paulucci developed Jeno`s frozen pizza, one of the first successful mass-marketed frozen foods. Paulucci sold Jeno`s to Pillsbury Co. in 1985 for about $200 million.

RJR sold the Chun King frozen food line to ConAgra Inc. in 1986.

RJR`s Nabisco Brands division agreed to sell the Chun King trademark, as well as sauce manufacturing equipment in St. Theresa, Canada, and production facilities in Cambridge, Md., and Ontario, Canada., said RJR Chairman Louis V. Gerstner Jr.

In addition to its dinners, Chun King markets soy sauce, water chestnuts, chow mein noodles, bamboo shoots and bean sprouts.

Chun King, which produced the only Oriental foods that many Americans in the 1950s and `60s knew of, began when Paulucci spotted bean sprouts at a deli in Minneapolis and discovered they could easily be grown in metal vats.

Paulucci`s next discovery virtually started the Oriental food business in the U.S. By combining the sprouts with chicken broth and garlic that his Italian mother routinely cooked with, Paulucci created the first chicken chow mein palatable to Americans.

``I gave people an Italian chow mein,`` said Paulucci in an interview two years ago.

Paulucci borrowed $2,500 from the wholesaler who stocked his mother`s tiny Italian grocery-actually the living room of their house-to buy the corrugated Quonset hut and $25 worth of bean sprouts that started Chun King in 1946.

In that 1987 interview, the then-68-year-old Paulucci recalled how he sold the multimillion-dollar business to RJR Reynolds, twice. The scene takes place in New York, in a room packed with corporate lawyers:

``I had made the deal for $40 million. When they treated me like a little peasant in New York, I got disgusted. There were attorneys there coming out of your ears. I heard one of them say, `I`m Harvard `35` and the other say `I`m Yale `36.`

``I sat there for about an hour and a half, and they were ignoring me. And I built this business, and they`re picking it apart-what they`re going to do with it.

``So I finally said to them, `You can take your $40 million and shove it. . . .`` Paulucci said.

Two years later, in 1966, Paulucci returned to New York and sold Chun King to R.J. Reynolds for $65 million. He gave $2 million of the proceeds to the employees who had helped build the Grand Rapids-based company.

The lastest sale needs the approval of the Federal Trade Commission.

Earlier this month, French food and beverage giant BSN bought several of RJR`s European units, including the United Kingdom biscuit business of Nabisco Brands; snackmakers Walker`s Crisps and Smith`s Crisps; and biscuit and pastry businesses in France and Italy.